Before the COVID19 outbreak, the solar industry had been experiencing year-on-year growth for the past two decades. However, the pandemic has managed to level off that growth. For instance, at the start of 2020, the total installed solar capacity in the US was predicted to grow by 13.5GW. It was almost double the 2016 figure of 8GW.
Projects all across the US and in many nations were set to reach new highs for both residential and commercial solar installations. Solar systems that are more efficient were being developed and released to the market at an amazing rate. At the start of the year, the outlook for the global solar industry was positive.
COVID19 Has Been a Game Changer
As COVID19 ravages all areas of the global economy, its true effect has yet to be quantified. There are too many uncertainties, including how long the pandemic will last. However, when it comes to the solar industry, it does not seem like the pandemic will have a lasting impact. While it is hard to say if the growth the industry was experiencing will continue, here is what is happening to the sector right now.
Delays in New Projects
As preventative measures have been implemented, most projects have been delayed. A good number of them are in the solar energy sector. While 2020 was predicted to be one of the best years for the solar industry, the current outlook is uncertain.
Many people in the industry are being cautious. Investors are looking to put their cash in long-term safe havens and that is affecting subcontractors. Besides that, as countries shut down entire regions, it has led to disruptions in the global supply chain.
However, it is worth noting that while there are delays right now, there was a lot of contracted work at the start of 2020. As soon as restrictions are lifted, most of this work will need to be completed. However, the effect will be that some projects will only be completed in 2021. Despite the short-term delays in new projects, the consensus is that COVID19 will not change the long-term trajectory of the solar industry.
The Outlook Remains Positive
COVID19 is a serious pandemic that should be taken seriously. Many governments have taken serious measures they deem to be necessary for the protection of their citizens. However, it does not spell the end of the solar industry.
Despite the pandemic causing delays in courtiers achieving the clean energy goals, the demand for solar energy remains high. Many investors and financial institutions still view the solar industry as AAA investment.
Clean Energy Goals Have Not Changed
In the past decade, many countries have set clean energy goals and signed international agreements to meet them. As a result, many of these countries will continue to offer incentives to the industry. It will ensure that the industry will pick up where it left off once the pandemic is over.
Optimism in the solar industry is not misplaced. For instance, there is over 30.4 GW of solar capacity that has already been contracted in the US alone. Whether the delays last for a few weeks or months, the demand for solar energy will continue. A major driver of this demand is the rising awareness of the effects of greenhouse gas emissions. Many people want to play their role in helping to save the earth.
The Source of Raw Materials for the Solar Industry
Countries will huge installed solar capacity such as Australia and the US still gent most of the raw materials for their solar system components from China. While the US has been moving away from buying their solar panels from China, the countries where they buy them sill source their raw materials from China. For instance, the aluminum framing used for solar systems mainly comes from China.
As production lines slowly come back online in China with limited capacity, the components for the solar industry will increase in price. However, the prices are expected to drop as the total manufacturing capacity comes back online.
To deal with the slowdowns in the supply chain, contractors in the solar industry are asking for long lead-time orders. Besides that, they are requesting for delays on current projects. However, there is also a positive side effect to the supply chain disruption. It is causing many companies to look for a diversified supply chain. The result will be prices that are more competitive in the future.
How the Market will react
Various issued such as labor shortages, installation delays, and material delays will have an impact on the solar sector. However, corporate demand after the pandemic will determine how the market recovers. Many investors are currently holding onto their cash until the crisis is over. The result has been a shortage of cash flow for subcontractors that need it to support their operations.
However, financial experts note that while there is market uncertainty, there is no alternative to cheap and clean power except existing renewable energy sources. Consequently, as long as interest rates remain low and capital is secured for future projects, it is only a matter of time before the industry rebounds.
Manufacturers Refocus their Priorities
As the demand for PPE has gone up, many manufacturers have reconfigured their factories to supply essential supplies to hospitals. Even major automotive makers like GM have retooled their factories to produce ventilators. The collective support for the healthcare sector has been encouraging. The hope is that this will lead to a faster recovery from the pandemic.
Cancellations in Residential Projects
Because of how contagious COVID19 can be, most homeowners are canceling or postponing work on their solar projects. While solar is considered an essential business, it is still hard to maintain social distancing during a home solar installation.
Besides that, most inspection agencies are unable to operate during the pandemics. With inspections and permits, most projects have stalled. To deal with the issue, some inspection agencies are accepting virtual inspections.
There is also the fact that many people are unsure of the future of their jobs. The result is that they may not be willing to complete the projects they had wanted. If work had not started on their solar system, many are opting to cancel it. Uncertainty over future unemployment is a big issue. However, that should be easily resolved once the pandemic is over.
Growth in Remote Selling
As many people are unable to leave their homes due to COVID19, remote selling is becoming popular. Many companies are reaching out to customers via Zoom and other online platforms to try to get them to purchase a solar power system. These activities are expected to intensify over the next few months. Once the world comes out of lockdown, there will be many contracts waiting to be fulfilled within the solar industry.
It is good to Be Prepared
Installing solar power is good for the environment and it helps to lower your utility bills. However, installing solar power does more than that; it helps you gain independence. Even during the pandemic, workers have continued to perform essential maintenance services. The pandemic has helped to demonstrate just how fragile the global economy can be. Many homeowners will come to this realization and try to take control of their lives. One way they will achieve this is by installing solar systems.
Summary
COVID19 has no doubt caused a slump is the global economy and affected the solar industry. However, once the global economy starts to recover, the solar sector is expected to rebound and continue to experience the amazing growth it was having before the pandemic.
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